NEW YORK - Stocks are creeping higher in early trading following reassurances from Federal Reserve chairman Ben Bernanke that the domestic economy is recovering.
Bernanke's comments come after another late-day plunge sent the Dow Jones industrial average to its lowest level in seven months. The Fed chairman says a recovery in the U.S. will be slow. He also says European leaders are taking proper steps to control deficits.
European markets are down Tuesday as investors remain cautious about the continent's recovery. Fitch Ratings says the United Kingdom is facing major fiscal challenges.
The Dow is up 9.45, or 0.1 percent, at 9,825.41. The Standard & Poor's 500 index is up 1.53, or 0.2 percent, at 1,052.00, while the Nasdaq composite index is up 3.27, or 0.2 percent, at 2,177.17.
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Sharp swings over the final hour of trading have become the norm in the market over the past month as investors remain concerned about what news might come out of Europe overnight about ongoing debt problems. The end-of-day moves are similar to the ones seen in late 2008 during the height of the credit crisis when investors feared holding onto stocks overnight.
Bernanke said late Monday that European leaders were taking the right steps to control rising deficits, but that wasn't enough to satisfy concerned traders. Major European indexes fell again early Tuesday.
Bernanke also said he didn't expect the U.S. economy to fall back into a second recession, which is reassuring after Friday's disappointing employment report.
The euro is rising after trading in a tight range overnight, which has helped cut into losses in European markets. It has also helped U.S. futures. The euro rose to $1.1953 a day after it dropped to a new four-year low.
The European Union hammered out new oversight measures aimed at heading off debt problems early among member countries. The EU's credibility has been called into question in recent months as countries like Greece, Spain and Portugal grapple with ballooning debt and try to implement austerity measures.
That has drained confidence from the euro, the currency used by 16 European countries. The euro has dropped nearly 12 percent since the beginning of May.
Ongoing uncertainty about Europe's health and the pace of a domestic recovery sent investors back into some safe-haven alternatives to stocks and the euro. Gold rose to a record high of $1,254.50 an ounce early Tuesday, before pulling back to $1,244.80 an ounce. The recent gains in the euro and stock futures pulled some investors away from gold.
Major indexes are trying to snap a two-day losing streak that has seen the Dow lose 4.3 percent. A disappointing jobs report Friday sent the market plunging. Monday's drop did not have an obvious catalyst.
The S&P 500 index fell below its previous lowest close for the year late in the day Monday, triggering a fresh round of selling. The S&P 500 posted its lowest close since November.
There are no major domestic economic reports due out Tuesday. Bernanke said the U.S. economy is strengthening, albeit slowly.
Economic data in recent months has shown the economy is recovering from recession. Jobs are being created, the manufacturing sector has consistently expanded and inflation remains tame. However, the pace of growth has not picked up as fast as investors expected, which has provided further fuel for recent selling.
The Fed releases its beige book report Wednesday, which provides a regional snapshot of economic activity. That report could provide some support for the battered market if the Fed's tone becomes more positive about the speed of the recovery.
Meanwhile, bond prices dipped Tuesday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.19 percent from 3.15 percent late Monday.
Overseas, Britain's FTSE 100 fell 0.8 percent, Germany's DAX index dropped 0.8 percent, and France's CAC-40 fell 0.7 percent. Japan's Nikkei stock average rose 0.2 percent.